Plaza Buyers of $53.5 Million Penthouses Sue Elad for Fraud 2008-09-08 19:17:05.410 GMT By David M. Levitt Sept. 8 (Bloomberg) -- The buyers of two penthouse condominium apartments for $53.5 million in the Plaza Hotel sued the developer for fraud, claiming they were misled about the quality of the properties. Elad Properties LLC promised ``one of a kind'' apartments on Fifth Avenue but made... [more]
Plaza Buyers of $53.5 Million Penthouses Sue Elad for Fraud
2008-09-08 19:17:05.410 GMT
By David M. Levitt
Sept. 8 (Bloomberg) -- The buyers of two penthouse condominium apartments for $53.5 million in the Plaza Hotel sued the developer for fraud, claiming they were misled about the quality of the properties.
Elad Properties LLC promised ``one of a kind'' apartments on Fifth Avenue but made ``material changes'' to the plans during construction and failed to disclose them, according to a 55-page complaint filed on Sept. 5 in New York State Supreme Court. The buyers weren't named.
``This was a classic bait and switch,'' Y. David Scharf, the purchaser's lawyer, said in a statement issued today. ``My client was led to believe that it would receive one of the most luxurious apartments in New York history; It got far less than what it bargained for.''
Design changes to the original plans decreased the size of the apartments, lowered ceiling heights and shrunk the windows, according to the complaint. Among those who bought condominiums at the Plaza are former Bear Stearns Cos. Chief Executive Officer James Cayne and New York developer Harry Macklowe.
The buyers, identified as Penthouse 2009 Inc. and Penthouse
2011 Inc., said they bought the units sight unseen, based on representations from the developer and broker.
``Unlike the classic Eloise series of children's books set in the Plaza Hotel,'' where the rooms ``embodied the height of elegance and sophistication, the same cannot be said of the penthouses,'' the complaint says.
$400 Million Renovation
Elad spent $400 million and two years renovating the Plaza, famed for its Palm Court, Oak Room bar and guestbook that has included Marilyn Monroe, Truman Capote and F. Scott Fitzgerald, with 182 condominiums and 282 hotel rooms. The plaintiffs agreed to pay $53.5 million for the penthouses.
When the buyers refused to close the sale, Elad declared them in default and sought to keep almost all of their $11 million deposit, according to the lawsuit. The plaintiffs are seeking a return of the deposit and more than $20 million in damages.
Elad's broker, Stribling & Associates, and its law firm, Kramer Levin Nafthalis & Frankel LLP, are named as co- defendants. Kramer Levin is holding the deposit for the apartments.
The lawsuit is ``baseless,'' Jay Neveloff, a partner at Kramer Levin, said in a statement.
``The apartments as delivered are the apartments as described on the plans he reviewed and the contract he signed,''
Neveloff said. ``Because the purchaser has, for some reason, changed his mind and decided not to close, does not alter the facts.''
The suit is Penthouse 2009 Inc. v. Plaza Residential Owner LP, 602578-08, Supreme Court of the State of New York, County of New York.
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Response by dco
over 17 years ago
Posts: 1319
Member since: Mar 2008
You mean to tell me that the actual size of the unit was smaller, shocking.
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Response by nyc10022
over 17 years ago
Posts: 9868
Member since: Aug 2008
Thing is, when this happened a year or two ago, the buyer didn't care because they could flip it. Does this mean buyers can't sell them for the 2005-6 prices? (I believe thats when these went into contract).
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Response by West81st
over 17 years ago
Posts: 5564
Member since: Jan 2008
They named Kramer Levin as a co-defendant? That can't be a good move. Talk about motivating your adversary.
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Response by zizizi
over 17 years ago
Posts: 371
Member since: Apr 2007
Now why would James Cayne be looking for an out from his $53mm penthouse?
Oh, that's right, he just took a $900mm loss when Bear collapsed.
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Response by lowery
over 17 years ago
Posts: 1415
Member since: Mar 2008
Does anyone wonder if these two penthouses are really the only trouble-in-paradise units at the Plaza?
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Response by mbz
over 17 years ago
Posts: 238
Member since: Feb 2008
Prices must be below sale levels are they'd be happy to flip them.
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Response by kgg
over 17 years ago
Posts: 404
Member since: Nov 2007
Just re-list them for $100 million. That's what they do at 15 CPW.
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Response by mazdamp
over 17 years ago
Posts: 80
Member since: Oct 2007
the market is DEAD!
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Response by alanhart
over 17 years ago
Posts: 12397
Member since: Feb 2007
NY Post (Yes, the 'Headless Body in Topless Bar' authority):
WHITE ELEPHANT
PEEVED PLAZA BUYERS RESELLING HALF THE APTS.
By BRADEN KEIL and LUKAS I. ALPERT
REALTY BITES: Many owners of multimillion-dollar Plaza apartments are complaining of small windows, low ceilings and buckling floors.Posted: 3:39 am
September 10, 2008
Eloise may be very lonely.
As many as 25 apartments in the world-famous Plaza are back on the market, with many owners struggling to sell their units in the problem-plagued building, The Post has learned.
"It's overwhelming," said one broker. "That's more than 50 percent of the residences that are for sale. I've never seen it happen before."
The relisted residences in the revamped building range in price from $1.8 million to $50 million. Some have languished on the slumping sales market for as long as six months with multimillion-dollar reductions. And more may be available soon, insiders said.
Many who bought into the building after its three-year renovation have been dissatisfied with a range of issues, from small windows to low ceilings to buckling floors.
Out of all the listings, just one apartment appears to be in contract, records show, and some sellers have been dropping their asking prices.
There are also 20 apartments for rent ranging from $5,800 to $75,000 a month.
The latest apartments to appear on the market include one owned by fashion icon Tommy Hilfiger, who is asking $50 million.
Other high rollers who have bought into the legendary property include embattled developer Harry Macklowe, New England Patriots owner Robert Kraft and James Cayne, head of now-defunct Bear Stearns. None are pulling out just yet.
The flood of listings comes as word that the apartments that had been sold - sight unseen - during renovations were not as promised.
The Post reported yesterday that Russian hedge-fund manager Andrei Vavilov filed a $31 million lawsuit against the project's developer El-Ad, claiming that the penthouse apartment they sold him was more like an "attic" than the luxury digs he'd been promised.
Vavilov's attorney argued his client was not alone in his discontent.
"Since this lawsuit was filed, people have reached out to us to share their experiences with El-Ad at The Plaza," Vavilov's attorney, David Scharf, told The Post.
"The biggest disappointment is it's not what was promised, from the windows to the ceiling heights," one broker said. "They should've been more honest."
Elizabeth Stribling, President and owner of Stribling & Associates that markets The Plaza Residences, stood by the project.
"This situation strikes me as a good old-fashioned case of 'buyer's remorse,' " she said in a statement. "The purchaser, who now appears to have changed his mind and wishes to break his contract, has no basis for doing so."
Brokers have also complained that potential clients had been treated cavalierly by Stribling.
"They wouldn't even allow them to go upstairs to see the views and the actual space," said one high-end agent who brought in a customer with a $20 million-plus budget.
Another broker, Dolly Lenz, said her customer just gave up after a few visits to the building.
"My client felt he wasn't getting the full story and finally decided to go elsewhere," she said.
There have been other problems as well.
One buyer of a two-bedroom apartment said her floors were buckling and that her ceiling was falling, said a person familiar with the sale.
The lighting on the building is also in need of replacing, after it was discovered that the lights El-Ad installed weren't weatherproof.
braden.keil@nypost.com
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Response by hrdnitlr
over 17 years ago
Posts: 149
Member since: Jun 2007
"The lighting on the building is also in need of replacing, after it was discovered that the lights El-Ad installed weren't weatherproof."
Oh, my God! Basic incompetence at such a high price point - - is it crookedness, naivete, or just plain stupidity on the part of the developers?
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Response by street_easy
over 17 years ago
Posts: 129
Member since: Mar 2007
Plaza buyer = money money than sense. El-Ad = PT Barnum. There is indeed a sucker born every minute. NY real estate has been one large pyramid scheme. No one cared as long as there was another sucker to sell to. Pretty soon though everyone will care.
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Response by street_easy
over 17 years ago
Posts: 129
Member since: Mar 2007
Meant to say more money than sense of course
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Response by street_easy
over 17 years ago
Posts: 129
Member since: Mar 2007
Though mabe money money fits too.
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Response by athena
about 17 years ago
Posts: 1
Member since: Feb 2007
Are any of the tenants in the Plaza happy?
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Response by lo888
about 17 years ago
Posts: 566
Member since: Jul 2008
Aren't we glad we saved our $50 million for something better?!
The manager of the LLC works for Banque Privée Edmond de Rothschild Europe.
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Response by somewhereelse
over 15 years ago
Posts: 7435
Member since: Oct 2009
Interesting... this is supposedly THE apartment, and at $3,058 psf, well below the average asking price for all apartments... ($3900 psf) and the old asking prices ($4345 psf)... and still way below the recorded sales average of $3600...
'/%3e%3c/g%3e%3c/svg%3e)
You mean to tell me that the actual size of the unit was smaller, shocking.
Thing is, when this happened a year or two ago, the buyer didn't care because they could flip it. Does this mean buyers can't sell them for the 2005-6 prices? (I believe thats when these went into contract).
They named Kramer Levin as a co-defendant? That can't be a good move. Talk about motivating your adversary.
Now why would James Cayne be looking for an out from his $53mm penthouse?
Oh, that's right, he just took a $900mm loss when Bear collapsed.
Does anyone wonder if these two penthouses are really the only trouble-in-paradise units at the Plaza?
Prices must be below sale levels are they'd be happy to flip them.
Just re-list them for $100 million. That's what they do at 15 CPW.
the market is DEAD!
NY Post (Yes, the 'Headless Body in Topless Bar' authority):
http://www.nypost.com/seven/09102008/news/regionalnews/white_elephant_128309.htm
WHITE ELEPHANT
PEEVED PLAZA BUYERS RESELLING HALF THE APTS.
By BRADEN KEIL and LUKAS I. ALPERT
REALTY BITES: Many owners of multimillion-dollar Plaza apartments are complaining of small windows, low ceilings and buckling floors.Posted: 3:39 am
September 10, 2008
Eloise may be very lonely.
As many as 25 apartments in the world-famous Plaza are back on the market, with many owners struggling to sell their units in the problem-plagued building, The Post has learned.
"It's overwhelming," said one broker. "That's more than 50 percent of the residences that are for sale. I've never seen it happen before."
The relisted residences in the revamped building range in price from $1.8 million to $50 million. Some have languished on the slumping sales market for as long as six months with multimillion-dollar reductions. And more may be available soon, insiders said.
Many who bought into the building after its three-year renovation have been dissatisfied with a range of issues, from small windows to low ceilings to buckling floors.
Out of all the listings, just one apartment appears to be in contract, records show, and some sellers have been dropping their asking prices.
There are also 20 apartments for rent ranging from $5,800 to $75,000 a month.
The latest apartments to appear on the market include one owned by fashion icon Tommy Hilfiger, who is asking $50 million.
Other high rollers who have bought into the legendary property include embattled developer Harry Macklowe, New England Patriots owner Robert Kraft and James Cayne, head of now-defunct Bear Stearns. None are pulling out just yet.
The flood of listings comes as word that the apartments that had been sold - sight unseen - during renovations were not as promised.
The Post reported yesterday that Russian hedge-fund manager Andrei Vavilov filed a $31 million lawsuit against the project's developer El-Ad, claiming that the penthouse apartment they sold him was more like an "attic" than the luxury digs he'd been promised.
Vavilov's attorney argued his client was not alone in his discontent.
"Since this lawsuit was filed, people have reached out to us to share their experiences with El-Ad at The Plaza," Vavilov's attorney, David Scharf, told The Post.
"The biggest disappointment is it's not what was promised, from the windows to the ceiling heights," one broker said. "They should've been more honest."
Elizabeth Stribling, President and owner of Stribling & Associates that markets The Plaza Residences, stood by the project.
"This situation strikes me as a good old-fashioned case of 'buyer's remorse,' " she said in a statement. "The purchaser, who now appears to have changed his mind and wishes to break his contract, has no basis for doing so."
Brokers have also complained that potential clients had been treated cavalierly by Stribling.
"They wouldn't even allow them to go upstairs to see the views and the actual space," said one high-end agent who brought in a customer with a $20 million-plus budget.
Another broker, Dolly Lenz, said her customer just gave up after a few visits to the building.
"My client felt he wasn't getting the full story and finally decided to go elsewhere," she said.
There have been other problems as well.
One buyer of a two-bedroom apartment said her floors were buckling and that her ceiling was falling, said a person familiar with the sale.
The lighting on the building is also in need of replacing, after it was discovered that the lights El-Ad installed weren't weatherproof.
braden.keil@nypost.com
"The lighting on the building is also in need of replacing, after it was discovered that the lights El-Ad installed weren't weatherproof."
Oh, my God! Basic incompetence at such a high price point - - is it crookedness, naivete, or just plain stupidity on the part of the developers?
Plaza buyer = money money than sense. El-Ad = PT Barnum. There is indeed a sucker born every minute. NY real estate has been one large pyramid scheme. No one cared as long as there was another sucker to sell to. Pretty soon though everyone will care.
Meant to say more money than sense of course
Though mabe money money fits too.
Are any of the tenants in the Plaza happy?
Aren't we glad we saved our $50 million for something better?!
#309 has just sold, for $29,000,000: http://streeteasy.com/nyc/sale/465428-condo-1-central-park-south-central-park-south-new-york
The manager of the LLC works for Banque Privée Edmond de Rothschild Europe.
Interesting... this is supposedly THE apartment, and at $3,058 psf, well below the average asking price for all apartments... ($3900 psf) and the old asking prices ($4345 psf)... and still way below the recorded sales average of $3600...
Also represents a 25% discount off asking...